So, Wow [AA change after divorce]

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Outer Marker
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So, Wow [AA change after divorce]

Post by Outer Marker » Tue Sep 24, 2019 8:22 am

It's been five years since my last post. Five years since I rebalanced my portfolio. A topic that gets little discussion here is divorce. It changes everything. If you think it can't happen to you, you're wrong. 20 years and solid, then, wow. Do your estate planning carefully. Keep inherited assets in trust. But, I digress.

So, I was on track to be comfortably retired at 50 with $5M in assets and a paid off house. Now, I've got about $2M in investable assets and $450K in equity on a $1.2M home on a 15 year mortgage. Plus long term care for my mom, and child support, which leaves me in the red each month. Thankfully there's enough savings that I can continue to max out 401K and take the tax benefit, even though its "deficit spending".

My plan now is to work until 68 when the mortgage will be paid off, and hope that some semblance of social security will be left to supplement investment income.

Which leads me to my question - asset allocation. "Age in bonds" would imply 50/50 but I'm thinking 70/30 would be more appropriate in this situation. I have a long enough time horizon that the bumps in the road should be smoothed out. (I was 50/50 in my mid 40's because I'd already won the game, and didn't feel I needed to take on the risk).

Is 70/30 too aggressive, or about right in this situation? I don't think I can afford the low risk 50/50 portfolio anymore. Basic profile is 100% index funds, with a slight tilt to value and emerging markets.

Thanks in advance.

-Outer Marker

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abuss368
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Re: So, Wow

Post by abuss368 » Tue Sep 24, 2019 8:30 am

Outer Marker wrote:
Tue Sep 24, 2019 8:22 am

Is 70/30 too aggressive, or about right in this situation? I don't think I can afford the low risk 50/50 portfolio anymore. Basic profile is 100% index funds, with a slight tilt to value and emerging markets.

Thanks in advance.

-Outer Marker
Welcome back to the forum! I am sorry to hear of the divorce and the negative impact to your finances. Onward and upward from here and you are doing the right thing by planning and reaching out to the forum for advice.

No one can answer your asset allocation but you. Asset allocation is based on goals, time frame, and tolerance for risk. It is the most important decision an investor can make. I understand you have concerns about the shortened time frame but you are starting with $2 million.

Be prepared for stocks to decrease 50% (or more) in the next downturn. If you can live with that and continue to buy stocks on the cheap then you are fine.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

lakpr
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Re: So, Wow

Post by lakpr » Tue Sep 24, 2019 8:38 am

For what it is worth: I am almost there (just a year shy of age 50), and my allocation is set to 70:30, and I plan to be at this target allocation for at least a decade more.

Sorry to read about your divorce. Here is encouragement to keep your chin up. This storm too shall pass and there will be sunshine in your life again.

Asset allocation is a deeply personal issue and each investor must make the decision themselves as to what allocation would let them sleep at night (SWAN factor). We can offer thumb rules and guidelines, I am just saying here that yes your 70:30 allocation does sound reasonable, and you have a fellow Boglehead following the same asset allocation (but I also have to say I am jealous; I don’t have 2 million in assets/net worth even as a dual earning couple).

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Re: So, Wow

Post by sjt » Tue Sep 24, 2019 8:45 am

Outer Marker wrote:
Tue Sep 24, 2019 8:22 am
So, I was on track to be comfortably retired at 50 with $5M in assets and a paid off house. Now, I've got about $2M in investable assets and $450K in equity on a $1.2M home on a 15 year mortgage. Plus long term care for my mom, and child support, which leaves me in the red each month. Thankfully there's enough savings that I can continue to max out 401K and take the tax benefit, even though its "deficit spending".

My plan now is to work until 68 when the mortgage will be paid off, and hope that some semblance of social security will be left to supplement investment income.
Net worth of $2.5M and you think you will work until age 68? Realistically, at some point the costs of long term care for Mom and child support will go away and you can move to a lower COL area - I suppose it depends on the lifestyle you want to live / maintain and how much you enjoy your job, if those are worth working until that late in life.
"The one who covets is the poorer man, | For he would have that which he never can; | But he who doesn't have and doesn't crave | Is rich, though you may hold him but a knave." - Wife of Bath tale

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midareff
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Re: So, Wow

Post by midareff » Tue Sep 24, 2019 8:51 am

I have been at roughly 48/48/4 .. equities, bonds and bank cash, for more than a dozen years now, probably closer to more than 15 years. Currently age 71 and 8 years retired. Did I lose out by not being more aggressive? .. Well.... probably, but I have no complaints with my results of an average yearly gain for the last ten years of 8.4% against a last 8 years WR of 3.96%, and only one negative year of -3.3% last year. I say that with full recognition we are in the longest bull market and the largest economic expansion on record. When you think of 70/30 try not to let recency bias into your forward planning. With the Shiller hovering near 30 and bond interest rates near record lows expecting much of a return on anything going forward may be nothing more than wishful thinking.

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Re: So, Wow

Post by Sandtrap » Tue Sep 24, 2019 8:53 am

Outer Marker wrote:
Tue Sep 24, 2019 8:22 am
It's been five years since my last post. Five years since I rebalanced my portfolio. A topic that gets little discussion here is divorce. It changes everything. If you think it can't happen to you, you're wrong. 20 years and solid, then, wow. Do your estate planning carefully. Keep inherited assets in trust. But, I digress.

So, I was on track to be comfortably retired at 50 with $5M in assets and a paid off house. Now, I've got about $2M in investable assets and $450K in equity on a $1.2M home on a 15 year mortgage. Plus long term care for my mom, and child support, which leaves me in the red each month. Thankfully there's enough savings that I can continue to max out 401K and take the tax benefit, even though its "deficit spending".

My plan now is to work until 68 when the mortgage will be paid off, and hope that some semblance of social security will be left to supplement investment income.

Which leads me to my question - asset allocation. "Age in bonds" would imply 50/50 but I'm thinking 70/30 would be more appropriate in this situation. I have a long enough time horizon that the bumps in the road should be smoothed out. (I was 50/50 in my mid 40's because I'd already won the game, and didn't feel I needed to take on the risk).

Is 70/30 too aggressive, or about right in this situation? I don't think I can afford the low risk 50/50 portfolio anymore. Basic profile is 100% index funds, with a slight tilt to value and emerging markets.

Thanks in advance.

-Outer Marker
Welcome back.
1. +1 Yes. The impact of divorce on finances, family, and life, can be severe and irreversible.
2. "2-2.5 Mil. In Investable Assets" (roughly 1/2 of what you had) is still far better than some who end up with nothing after a divorce. You've got a good plan making the best of the situation.
3. RE: Asset Allocation. 70/30 vs 50/50 ???
YOUR AGE: 50

a) As stated earlier. There's not a huge difference in numbers between 70/30 and 50/50. The difference is "behavioral".
How would you react if the market fell and your equities fell 50%.??

That means 35% with a 70/30 allocation. And, 25% with a 50/50 allocation. A 10% difference.
Consider split the difference with a 60/40 based on your limited data given.

Actionable suggestion:
(Let's start all over again like we did 5 years ago with a comprehensive portfolio review to really get you on solid ground)
Asking Portfolio Questions
https://www.bogleheads.org/forum/viewt ... =1&t=6212

Otherwise, based on the limited data given, there's just general suggestions and discussions on the pros and cons of various allocations suited or not suited for you. There's so much to consider going forward and things that will change. So, let's look at the whole thing with numbers.

j :D
Wiki Bogleheads Wiki: Everything You Need to Know

HomeStretch
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Re: So, Wow

Post by HomeStretch » Tue Sep 24, 2019 8:57 am

Agree that asset allocation for your portfolio is personal. Anywhere from 50/50 to 70/30 is reasonable IMO.

The bigger impact on your portfolio is that your monthly expenses exceed your monthly income for the foreseeable future. Some of your expenses like childcare and parent support will go away in time. But you can’t count on working until age 68 as health or other issues might impact that plan. Consider downsizing your housing expense to stop the monthly deficit and having to work until age 68 to pay off the mortgage.

The divorce was a setback to your finances and planned retirement date. But your $2 million portfolio gives $80k spend at 4% + $20k guesstimate in SS for a total of $100k of income per year. If you can get expenses in line with that you should be financially independent well before age 68.

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Re: So, Wow

Post by KlangFool » Tue Sep 24, 2019 9:02 am

OP,

Sell the house and early retired. This happened to one of my family members. He could not retire with his spouse. The spouse chooses to divorce him after 20+ years. Then, with 50% of the asset and he sold the house, he early retired.

KlangFool

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Re: So, Wow

Post by BarbBrooklyn » Tue Sep 24, 2019 9:06 am

Why are you funding your mother's long term care?
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bloom2708
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Re: So, Wow

Post by bloom2708 » Tue Sep 24, 2019 9:07 am

KlangFool wrote:
Tue Sep 24, 2019 9:02 am
OP,

Sell the house and early retired. This happened to one of my family members. He could not retire with his spouse. The spouse chooses to divorce him after 20+ years. Then, with 50% of the asset and he sold the house, he early retired.

KlangFool
+1

OP, you are now paddling your own solo boat. You don't need as much to retire as you did before. Sell the big house. It is an anchor slowing you down. The world is your oyster. Mostly likely you will re-marry within a year or 2 (I see that there is already a young fiance in the picture, true dat). THAT seems to complicate most peoples lives post divorce more than anything. In the end, the OP is still way ahead of the game.
Last edited by bloom2708 on Tue Sep 24, 2019 10:00 am, edited 1 time in total.
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Re: So, Wow

Post by Outer Marker » Tue Sep 24, 2019 9:15 am

HomeStretch wrote:
Tue Sep 24, 2019 8:57 am
Agree that asset allocation for your portfolio is personal. Anywhere from 50/50 to 70/30 is reasonable IMO.

The bigger impact on your portfolio is that your monthly expenses exceed your monthly income for the foreseeable future. Some of your expenses like childcare and parent support will go away in time. But you can’t count on working until age 68 as health or other issues might impact that plan. Consider downsizing your housing expense to stop the monthly deficit and having to work until age 68 to pay off the mortgage.

The divorce was a setback to your finances and planned retirement date. But your $2 million portfolio gives $80k spend at 4% + $20k guesstimate in SS for a total of $100k of income per year. If you can get expenses in line with that you should be financially independent well before age 68.
Expenses are, unfortunately, in line with what it costs to live here. I've read the "millionare next door" and live by it. I was a "prodigious saver" which is how I got to $5M in savings and a paid off house. My car is 12 years old. Just bought the house. Unfortunately, I can't control the huge expenses of $10K a month in nursing care and $4L in child support. That's what leads to the deficit.

I also have to put my scandously young fiance through med school. (Yes, prenup, which she asked for!) Large investment, but potentially large return, and you can't put a price on these things.

I like what I do, and can easily keep this going into my late 60's. Keeps me young. That, and a bit of hair color...

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Re: So, Wow

Post by Outer Marker » Tue Sep 24, 2019 9:17 am

BarbBrooklyn wrote:
Tue Sep 24, 2019 9:06 am
Why are you funding your mother's long term care?
That is a sacred obligation. I'd bankrupt myself before I neglected my mom.

THY4373
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Re: So, Wow

Post by THY4373 » Tue Sep 24, 2019 9:20 am

bloom2708 wrote:
Tue Sep 24, 2019 9:07 am
KlangFool wrote:
Tue Sep 24, 2019 9:02 am
OP,

Sell the house and early retired. This happened to one of my family members. He could not retire with his spouse. The spouse chooses to divorce him after 20+ years. Then, with 50% of the asset and he sold the house, he early retired.

KlangFool
+1

OP, you are now paddling your own solo boat. You don't need as much to retire as you did before. Sell the big house. It is an anchor slowing you down. The world is your oyster. Mostly likely you will re-marry within a year or 2. THAT seems to complicate most peoples lives post divorce more than anything. In the end, the OP is still way ahead of the game.
Divorce was the best thing to happen to me. I live an awesome solo life post divorce. I have been able to cut my living costs, improve my relationship with my son and travel the world in the three years since my ex and I separated and divorced. I have been to 25 countries in the last three years. Solo folks have one advantage I call our superpower which is flexibility. Use that and find away to leave the rat race before 68. Also my advice to you is take the time to heal and don't be in a rush to get into a new relationship. You might even find like me that the solo life fits you best.

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Re: So, Wow

Post by HomeStretch » Tue Sep 24, 2019 9:23 am

Outer Marker wrote:
Tue Sep 24, 2019 9:15 am
HomeStretch wrote:
Tue Sep 24, 2019 8:57 am
Agree that asset allocation for your portfolio is personal. Anywhere from 50/50 to 70/30 is reasonable IMO.

The bigger impact on your portfolio is that your monthly expenses exceed your monthly income for the foreseeable future. Some of your expenses like childcare and parent support will go away in time. But you can’t count on working until age 68 as health or other issues might impact that plan. Consider downsizing your housing expense to stop the monthly deficit and having to work until age 68 to pay off the mortgage.

The divorce was a setback to your finances and planned retirement date. But your $2 million portfolio gives $80k spend at 4% + $20k guesstimate in SS for a total of $100k of income per year. If you can get expenses in line with that you should be financially independent well before age 68.
Expenses are, unfortunately, in line with what it costs to live here. I've read the "millionare next door" and live by it. I was a "prodigious saver" which is how I got to $5M in savings and a paid off house. My car is 12 years old. Just bought the house. Unfortunately, I can't control the huge expenses of $10K a month in nursing care and $4L in child support. That's what leads to the deficit.

I also have to put my scandously young fiance through med school. (Yes, prenup, which she asked for!) Large investment, but potentially large return, and you can't put a price on these things.

I like what I do, and can easily keep this going into my late 60's. Keeps me young. That, and a bit of hair color...
Good luck with this next phase of your life!

You have a lot of people relying on your support (parent, children, fiancée). Hopefully you have adequate term life and disability insurance to continue this support in the event something happens to you.

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Re: So, Wow

Post by RickBoglehead » Tue Sep 24, 2019 9:24 am

Outer Marker wrote:
Tue Sep 24, 2019 9:17 am
BarbBrooklyn wrote:
Tue Sep 24, 2019 9:06 am
Why are you funding your mother's long term care?
That is a sacred obligation. I'd bankrupt myself before I neglected my mom.
Everyone's situation is different. As often discussed, if mom's assets are depleted, there are other options for funding nursing care, although one may not choose to use them, Medicaid for example. It's tough when a parent legitimately runs out of money and has expensive care that is required. Sometimes less expensive care is perfectly adequate, but family feels compelled to provide a higher level of care.
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cherijoh
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Re: So, Wow

Post by cherijoh » Tue Sep 24, 2019 9:49 am

Outer Marker wrote:
Tue Sep 24, 2019 9:15 am
HomeStretch wrote:
Tue Sep 24, 2019 8:57 am
Agree that asset allocation for your portfolio is personal. Anywhere from 50/50 to 70/30 is reasonable IMO.

The bigger impact on your portfolio is that your monthly expenses exceed your monthly income for the foreseeable future. Some of your expenses like childcare and parent support will go away in time. But you can’t count on working until age 68 as health or other issues might impact that plan. Consider downsizing your housing expense to stop the monthly deficit and having to work until age 68 to pay off the mortgage.

The divorce was a setback to your finances and planned retirement date. But your $2 million portfolio gives $80k spend at 4% + $20k guesstimate in SS for a total of $100k of income per year. If you can get expenses in line with that you should be financially independent well before age 68.
Expenses are, unfortunately, in line with what it costs to live here. I've read the "millionare next door" and live by it. I was a "prodigious saver" which is how I got to $5M in savings and a paid off house. My car is 12 years old. Just bought the house. Unfortunately, I can't control the huge expenses of $10K a month in nursing care and $4L in child support. That's what leads to the deficit.

I also have to put my scandously young fiance through med school. (Yes, prenup, which she asked for!) Large investment, but potentially large return, and you can't put a price on these things.

I like what I do, and can easily keep this going into my late 60's. Keeps me young. That, and a bit of hair color...
I'm still not sure how you went from $5M and a paid off house to $2M and $450K equity in a new house. What happened to the equity in your paid off house? If your ex-wife kept it, that should have been reflected in your settlement (i.e., you kept more than 50% of liquid assets).

If houses are that expensive ( i.e., "in line with what it costs to live here") then some money went "poof" - unless you are posting after having paid many months of nursing home and child support expenses since the divorce.

I think your current situation is risky is in light of your age and desire to work to age 68. How many more years of child support and what are your obligations with respect to paying for college?

Edited to Add: If you are spending money out of taxable to cover expenses while simulateously contributing to your workplace retirement plan, then you are concentrating your wealth in tax-advantaged plans and home equity. This is ok if thing go your way with respect to continued employment, but probably not the best situation if you lose your job before you want to retire.

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Re: So, Wow

Post by Dottie57 » Tue Sep 24, 2019 10:38 am

OP,

Your expenses are too high.

Mom’s long term care 10k per month
1.5 million house with a LARGE mortgage.
4K child support
Expensive Fiancé. Paying for medical school - you are nuts! She can get loans.

You may not have anything left by age 68.

stoptothink
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Re: So, Wow

Post by stoptothink » Tue Sep 24, 2019 10:42 am

Dottie57 wrote:
Tue Sep 24, 2019 10:38 am
OP,

Your expenses are too high.

Mom’s long term care 10k per month
1.5 million house with a LARGE mortgage.
4K child support
Lots of expensive travel-25 countries
Expensive Fiancé. Paying for medical school - you are nuts! She can get loans.

You may not have anything left by age 68.
It's all a choice. OP can retire now if they really wanted to.

ohai
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Re: So, Wow [AA change after divorce]

Post by ohai » Tue Sep 24, 2019 10:44 am

Maybe you could find a new wife who is divorced with $2 million of assets and combine to get $5 million back.

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Re: So, Wow

Post by Dottie57 » Tue Sep 24, 2019 10:46 am

stoptothink wrote:
Tue Sep 24, 2019 10:42 am
Dottie57 wrote:
Tue Sep 24, 2019 10:38 am
OP,

Your expenses are too high.

Mom’s long term care 10k per month
1.5 million house with a LARGE mortgage.
4K child support
Lots of expensive travel-25 countries
Expensive Fiancé. Paying for medical school - you are nuts! She can get loans.

You may not have anything left by age 68.
It's all a choice. OP can retire now if they really wanted to.
I realize he can retire today if he cuts expenses. Everything except child support could be cut.

THY4373
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Re: So, Wow

Post by THY4373 » Tue Sep 24, 2019 10:46 am

stoptothink wrote:
Tue Sep 24, 2019 10:42 am
Dottie57 wrote:
Tue Sep 24, 2019 10:38 am
OP,

Your expenses are too high.

Mom’s long term care 10k per month
1.5 million house with a LARGE mortgage.
4K child support
Lots of expensive travel-25 countries
Expensive Fiancé. Paying for medical school - you are nuts! She can get loans.

You may not have anything left by age 68.
It's all a choice. OP can retire now if they really wanted to.
I agree especially funding the fiance. Though it was me and not OP who has been to 25 countries and I am doing that on CC points while still saving about 40% of my gross income.

EnjoyIt
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Re: So, Wow

Post by EnjoyIt » Tue Sep 24, 2019 11:02 am

Outer Marker wrote:
Tue Sep 24, 2019 9:15 am
HomeStretch wrote:
Tue Sep 24, 2019 8:57 am
Agree that asset allocation for your portfolio is personal. Anywhere from 50/50 to 70/30 is reasonable IMO.

The bigger impact on your portfolio is that your monthly expenses exceed your monthly income for the foreseeable future. Some of your expenses like childcare and parent support will go away in time. But you can’t count on working until age 68 as health or other issues might impact that plan. Consider downsizing your housing expense to stop the monthly deficit and having to work until age 68 to pay off the mortgage.

The divorce was a setback to your finances and planned retirement date. But your $2 million portfolio gives $80k spend at 4% + $20k guesstimate in SS for a total of $100k of income per year. If you can get expenses in line with that you should be financially independent well before age 68.
I also have to put my scandously young fiance through med school. (Yes, prenup, which she asked for!) Large investment, but potentially large return, and you can't put a price on these things.
I met a girl like that in med school. She had a guy paying for education while she fooled around on him. Once she was done with school she left him. Please stop paying for her education, make her get loans. You can always help her pay them back once she is done with school and residency if you stay together. I'm sure you love her and she loves you, but I would have hoped you learned your lesson from the last divorce. Please don't be taken a fool twice.

Next, is there any way to get your mom into a different nursing home covered by Medicaid and then hire assistance so that she still gets amazing care but at a fraction of the cost? Maybe hired help that will check up on her several times a day to make sure she is doing well and gets everything she needs. Honestly I am not sure the logistics or cost, but you spending $10k out of pocket without medicaid stepping in and helping out does not seam fare to you. Though I, like you would pay whatever I had to for my parents.

If you are running at a deficit now, something must change. I realize mom is in a nursing home, but is she there because of Alzheimers or some other debilitating condition? If the later then being honest with ourselves she probably does not have much left and that $10k bill will eventually disappear. If the former then it may be a good idea to start cutting expenses and I would start with the house.

lastly, just because you think you can work till 68 does not mean you will be able to do so. Working till 68 should not be your plan. Re-evaluate your math and options and please try again.

hightower
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Re: So, Wow [AA change after divorce]

Post by hightower » Tue Sep 24, 2019 11:25 am

So, if you're "in the red" each month, I would think the prudent thing to do would be to get rid of the 1.2 million dollar home and buy or rent one that is actually affordable.

And the young fiancé in med school...paying for her education has to be about the dumbest thing you could be doing right now. That's a re-bound if I've ever heard of one. Or is she why your wife divorced you? Either way, you're getting played. She will not be sticking around once she's done taking your money for her education. Some girls know how to play men, wow.

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Re: So, Wow [AA change after divorce]

Post by fru-gal » Tue Sep 24, 2019 11:37 am

Don't pay to put the fiance through school. That will be a giant debt that could crush your own financial plans. Let her take out loans. As a doc, she can pay them back.

Even if you're both madly in love forever, that is her financial responsibility.

I'm trying to imagine being in love with someone decades younger, and he says, Honey, you'll pay to put me through med school, right? (How crazy is this :-)

If she takes that decision badly, that tells you something about her. Also, if you go down the tubes financially, what happens to your Mom?
Last edited by fru-gal on Tue Sep 24, 2019 11:42 am, edited 1 time in total.

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Re: So, Wow

Post by abuss368 » Tue Sep 24, 2019 11:42 am

BarbBrooklyn wrote:
Tue Sep 24, 2019 9:06 am
Why are you funding your mother's long term care?
I did not understand that either.
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Re: So, Wow

Post by abuss368 » Tue Sep 24, 2019 11:42 am

Outer Marker wrote:
Tue Sep 24, 2019 9:17 am
BarbBrooklyn wrote:
Tue Sep 24, 2019 9:06 am
Why are you funding your mother's long term care?
That is a sacred obligation. I'd bankrupt myself before I neglected my mom.
Thanks.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

delamer
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Re: So, Wow [AA change after divorce]

Post by delamer » Tue Sep 24, 2019 11:47 am

If you have deficit spending each month, that raises 2 questions:

1. How much are you drawing down your savings each month?

2. How are you going to pay for med school?

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Re: So, Wow

Post by stoptothink » Tue Sep 24, 2019 11:59 am

EnjoyIt wrote:
Tue Sep 24, 2019 11:02 am
Outer Marker wrote:
Tue Sep 24, 2019 9:15 am
HomeStretch wrote:
Tue Sep 24, 2019 8:57 am
Agree that asset allocation for your portfolio is personal. Anywhere from 50/50 to 70/30 is reasonable IMO.

The bigger impact on your portfolio is that your monthly expenses exceed your monthly income for the foreseeable future. Some of your expenses like childcare and parent support will go away in time. But you can’t count on working until age 68 as health or other issues might impact that plan. Consider downsizing your housing expense to stop the monthly deficit and having to work until age 68 to pay off the mortgage.

The divorce was a setback to your finances and planned retirement date. But your $2 million portfolio gives $80k spend at 4% + $20k guesstimate in SS for a total of $100k of income per year. If you can get expenses in line with that you should be financially independent well before age 68.
I also have to put my scandously young fiance through med school. (Yes, prenup, which she asked for!) Large investment, but potentially large return, and you can't put a price on these things.
I met a girl like that in med school. She had a guy paying for education while she fooled around on him. Once she was done with school she left him. Please stop paying for her education, make her get loans. You can always help her pay them back once she is done with school and residency if you stay together. I'm sure you love her and she loves you, but I would have hoped you learned your lesson from the last divorce. Please don't be taken a fool twice.

Next, is there any way to get your mom into a different nursing home covered by Medicaid and then hire assistance so that she still gets amazing care but at a fraction of the cost? Maybe hired help that will check up on her several times a day to make sure she is doing well and gets everything she needs. Honestly I am not sure the logistics or cost, but you spending $10k out of pocket without medicaid stepping in and helping out does not seam fare to you. Though I, like you would pay whatever I had to for my parents.

If you are running at a deficit now, something must change. I realize mom is in a nursing home, but is she there because of Alzheimers or some other debilitating condition? If the later then being honest with ourselves she probably does not have much left and that $10k bill will eventually disappear. If the former then it may be a good idea to start cutting expenses and I would start with the house.

lastly, just because you think you can work till 68 does not mean you will be able to do so. Working till 68 should not be your plan. Re-evaluate your math and options and please try again.
I've echoed my personal story countless times on this board: got married while ex was a senior, paid off all her undergrad loans and then cash-flowed her way through dental school. We separated during her final semester. She finished undergrad and dental school with no debt, having received no parental assistance and having yet to work a day in her life - all thanks to me. She didn't marry me to pay for her school, but it kind of worked out that way. Fun times, at least I was only 29 when it ended. At OP's age, with that level of financial responsibilities, IMO even considering helping out with education costs is nuts, but to each their own.

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Re: So, Wow [AA change after divorce]

Post by BarbBrooklyn » Tue Sep 24, 2019 12:11 pm

Re: Long Term Care. Is your mother in a NH that accepts Medicaid (in addition to her SS/pension) after some period of private pay?

Have you consulted a certified Eldercare Attorney on her behalf to see what the possibilities are? Are you splitting this bill with siblings?
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Re: So, Wow [AA change after divorce]

Post by ohai » Tue Sep 24, 2019 12:26 pm

Wait, are you guys saying OP is a 50-year-old guy putting a fiance through med school? This is like sketchy to the max.

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Re: So, Wow [AA change after divorce]

Post by Wiggums » Tue Sep 24, 2019 12:45 pm

Sorry for your divorce. That’s a difficult situation even when both parties want it.

I think you are saying that you have a paid off house and 450k equity in the former family home?

We don’t know enough about your income and expenses. I’d take a hard look at your expenses, future medical expenses, etc. then I would map out your future in excel. I’d lean forwards retiring in the next few years, if the numbers work for you. It’s not clear how far in the red you are pushing yourself. What’s to stop the ex wife from taking you back to court to request addition support for private college for the children?

I’m not beating up on you, but I would not be paying for medical school. Especially since you are helping with mom’s LTC which already put you in the red?

Good luck to you...

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Re: So, Wow [AA change after divorce]

Post by EnjoyIt » Tue Sep 24, 2019 12:53 pm

ohai wrote:
Tue Sep 24, 2019 12:26 pm
Wait, are you guys saying OP is a 50-year-old guy putting a fiance through med school? This is like sketchy to the max.
Sketchy maybe, but I am a pig and if I was single in my 50s, I would be damn excited to be dating a 20 something year old. But I would do it with the full understanding of its implications and risks.

high-five to OP.
:sharebeer

Disclaimer: I have a hot younger wife.

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Re: So, Wow [AA change after divorce]

Post by goodenyou » Tue Sep 24, 2019 1:27 pm

So, Wow [Decisions after divorce]

I would be very careful about risking up to meet your investment goals. What you can control to meet your investment goals is spending less and saving. I would slash and burn like crazy. Down size the house and lifestyle.

As far as getting back into another marriage with someone in medical school and half your age? Well, let's just say that that can be filled with landmines. I didn't get married until after medical school and residency. I was engaged to someone from medical school and it ended in residency once we were planning the wedding. As someone above cautioned about medical students and doctors in training, I will second that. It would not have turned out too well as I look back on it. It didn't work out too well for her as she ended up in divorce years later. There are lots of issues with medical students. Not saying it can't work, but the odds are against you. Best of luck.
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Re: So, Wow [AA change after divorce]

Post by cheese_breath » Tue Sep 24, 2019 1:48 pm

First thing you should concentrate on is getting your spending down so you're not in the red each month. Do you really need a $1.2 M house and the mortgage it brings with it? Moving to a riskier AA is just that, more risky.
The surest way to know the future is when it becomes the past.

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Re: So, Wow [AA change after divorce]

Post by sd323232 » Tue Sep 24, 2019 2:04 pm

ohai wrote:
Tue Sep 24, 2019 12:26 pm
Wait, are you guys saying OP is a 50-year-old guy putting a fiance through med school? This is like sketchy to the max.
We all know how this gonna end, but I understand the feeling.....

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Re: So, Wow [AA change after divorce]

Post by cheese_breath » Tue Sep 24, 2019 2:09 pm

sd323232 wrote:
Tue Sep 24, 2019 2:04 pm
ohai wrote:
Tue Sep 24, 2019 12:26 pm
Wait, are you guys saying OP is a 50-year-old guy putting a fiance through med school? This is like sketchy to the max.
We all know how this gonna end, but I understand the feeling.....
Assuming the fiance actually becomes his wife after completing med school, this might be his backup plan if medical reasons prevent him from working till age 68.
The surest way to know the future is when it becomes the past.

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Re: So, Wow

Post by HeadHunter » Tue Sep 24, 2019 2:12 pm

Outer Marker wrote:
Tue Sep 24, 2019 9:17 am
BarbBrooklyn wrote:
Tue Sep 24, 2019 9:06 am
Why are you funding your mother's long term care?
That is a sacred obligation. I'd bankrupt myself before I neglected my mom.
If this is true then you would sell the house immediately and move into a cheap rental for as long as mom needs the LTC.

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Re: So, Wow [AA change after divorce]

Post by goodenyou » Tue Sep 24, 2019 2:13 pm

cheese_breath wrote:
Tue Sep 24, 2019 2:09 pm
sd323232 wrote:
Tue Sep 24, 2019 2:04 pm
ohai wrote:
Tue Sep 24, 2019 12:26 pm
Wait, are you guys saying OP is a 50-year-old guy putting a fiance through med school? This is like sketchy to the max.
We all know how this gonna end, but I understand the feeling.....
Assuming the fiance actually becomes his wife after completing med school, this might be his backup plan if medical reasons prevent him from working till age 68.
That is a worse strategy than a 100% equities AA.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.

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Re: So, Wow [AA change after divorce]

Post by ohai » Tue Sep 24, 2019 2:14 pm

Ok. I guess I should not be presumptuous about OP's relationship. However, I think some advice above is good regarding segregating school costs, just like you would financial assets, until after marrige. This seems like a good practice in general, especially for items of such significant financial magnitude.

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Re: So, Wow [AA change after divorce]

Post by Outer Marker » Tue Sep 24, 2019 3:14 pm

Thank you all for the thoughtful replies.

I'd intended this more as a question on asset allocation, and 70/30 seems "about right" given my goals and a 15 year time horizon. I could knock it down to 60/40, but I think 50-50 (my prior allocation) is too conservative.

I appreciate all the words of advice and caution about my personal situation and the generally sound boglehead theory to cut expenses and live as frugally as possible. But, I think that "deficit spending" is warranted in this situation to maintain the lifestyle I want and care for those who depend on me:

- Not getting rid of the house. I do live in a high cost city, and real estate, including rentals, is very expensive. I'm paying $6,000 a month on a 15 year mortgage vs. $4,000 for what I was paying to rent a 2BR. My kids now have a real place to visit and their own rooms when they come over; my dog has a yard; and I own my own four walls which just feels good.

- Assisted living for mom is worth every penny. Yeah, I could find something cheaper, but it would not be as nice. Feels like a resort and the food is excellent. For those advocating a medicade facility, you should see what those places are like. Really nasty. Depressing. This expense will not continue forever. Mom is in her 90's and collapsed yesterday and was taken to the ER. Thankfully doing fine now. She made many saccrifices for me, and did it on a teacher's salary. The best schools and other opportunities. She taught me how to "fish." Its why I have everything I do. My turn to take care of her now. Assisted living is the dirty little secret of the American health care system.

- My fiance is wonderful. I do not know what she sees in an old fart like me, but I am a very lucky man. Its been five years since the ex and I separated, so this is not exactly jumping in on a rebound. Dated plenty of others before I found her. We'd been living together for a year before we got engaged. She likes to pay her own way, works six days a week, etc. Never wants to go on vacation because its too expensive and takes her away from work. To say I'm paying for medical school is a bit of an exaggeration. She wants to take out her own student loans, but I'm not going to charge her for rent and groceries. I can support her in that way.

- I do have a "bail out" plan. My mom owns a house free and clear in New England that I'm renting out (which covers a bit of her care expenses). If I get sick or lose my job, I could retreat there. But, I'm earning good money, and likely to get a substantial increase in the next year. And, although I'm footing the bill right now, I'll inherit mom's assets when she passes.

-The divorce was exceedingly expensive on many fronts. A true "war of the roses." I'm a reasonable guy. This should have been settled at the outset, but instead we spent two years litigating it. Attorney fees alone were in excess of $400,000, and there was collateral damage to my career, etc. This is the single biggest threat to your wealth! No way to insure against it other than a prenup. Which we will have this time around.

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Re: So, Wow

Post by LeftCoastIV » Tue Sep 24, 2019 3:24 pm

abuss368 wrote:
Tue Sep 24, 2019 11:42 am
Outer Marker wrote:
Tue Sep 24, 2019 9:17 am
BarbBrooklyn wrote:
Tue Sep 24, 2019 9:06 am
Why are you funding your mother's long term care?
That is a sacred obligation. I'd bankrupt myself before I neglected my mom.
Thanks.
Do you have siblings or other family members that could/should be helping with these expenses?

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Re: So, Wow [AA change after divorce]

Post by KlangFool » Tue Sep 24, 2019 3:26 pm

Outer Marker wrote:
Tue Sep 24, 2019 3:14 pm

- Not getting rid of the house. I do live in a high cost city, and real estate, including rentals, is very expensive. I'm paying $6,000 a month on a 15 year mortgage vs. $4,000 for what I was paying to rent a 2BR. My kids now have a real place to visit and their own rooms when they come over; my dog has a yard; and I own my own four walls which just feels good.
Outer Marker,

The correct comparison is you tied up 1.2 million or 400K to 500K equity in the house plus paying $6,000 per month. So, even assuming a conservative 6% return on that 500K, it is another 30K per year. You missed the opportunity cost of tying up your money into the house.

So, the actual number is 48K per year via 2BR rental versus 102K per year on the house. The difference is 52K per year. Enough money to put your kids and your mother into a 5 stars hotel when they visit.

Or, you could rent a bigger house and you still save money.

KlangFool

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Re: So, Wow [AA change after divorce]

Post by LeftCoastIV » Tue Sep 24, 2019 3:29 pm

KlangFool wrote:
Tue Sep 24, 2019 3:26 pm
Outer Marker wrote:
Tue Sep 24, 2019 3:14 pm

- Not getting rid of the house. I do live in a high cost city, and real estate, including rentals, is very expensive. I'm paying $6,000 a month on a 15 year mortgage vs. $4,000 for what I was paying to rent a 2BR. My kids now have a real place to visit and their own rooms when they come over; my dog has a yard; and I own my own four walls which just feels good.
Outer Marker,

The correct comparison is you tied up 1.2 million or 400K to 500K equity in the house plus paying $6,000 per month. So, even assuming a conservative 6% return on that 500K, it is another 30K per year. You missed the opportunity cost of tying up your money into the house.

So, the actual number is 48K per year via 2BR rental versus 102K per year on the house. The difference is 52K per year. Enough money to put your kids and your mother into a 5 stars hotel when they visit.

Or, you could rent a bigger house and you still save money.

KlangFool
Presumably the house appreciates as well, as its own asset class (subject to market risk, like equities and other asset classes).

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Re: So, Wow [AA change after divorce]

Post by delamer » Tue Sep 24, 2019 3:36 pm

Outer Marker wrote:
Tue Sep 24, 2019 3:14 pm
Thank you all for the thoughtful replies.

I'd intended this more as a question on asset allocation, and 70/30 seems "about right" given my goals and a 15 year time horizon. I could knock it down to 60/40, but I think 50-50 (my prior allocation) is too conservative.

I appreciate all the words of advice and caution about my personal situation and the generally sound boglehead theory to cut expenses and live as frugally as possible. But, I think that "deficit spending" is warranted in this situation to maintain the lifestyle I want and care for those who depend on me:

- Not getting rid of the house. I do live in a high cost city, and real estate, including rentals, is very expensive. I'm paying $6,000 a month on a 15 year mortgage vs. $4,000 for what I was paying to rent a 2BR. My kids now have a real place to visit and their own rooms when they come over; my dog has a yard; and I own my own four walls which just feels good.

- Assisted living for mom is worth every penny. Yeah, I could find something cheaper, but it would not be as nice. Feels like a resort and the food is excellent. For those advocating a medicade facility, you should see what those places are like. Really nasty. Depressing. This expense will not continue forever. Mom is in her 90's and collapsed yesterday and was taken to the ER. Thankfully doing fine now. She made many saccrifices for me, and did it on a teacher's salary. The best schools and other opportunities. She taught me how to "fish." Its why I have everything I do. My turn to take care of her now. Assisted living is the dirty little secret of the American health care system.

- My fiance is wonderful. I do not know what she sees in an old fart like me, but I am a very lucky man. Its been five years since the ex and I separated, so this is not exactly jumping in on a rebound. Dated plenty of others before I found her. We'd been living together for a year before we got engaged. She likes to pay her own way, works six days a week, etc. Never wants to go on vacation because its too expensive and takes her away from work. To say I'm paying for medical school is a bit of an exaggeration. She wants to take out her own student loans, but I'm not going to charge her for rent and groceries. I can support her in that way.

- I do have a "bail out" plan. My mom owns a house free and clear in New England that I'm renting out (which covers a bit of her care expenses). If I get sick or lose my job, I could retreat there. But, I'm earning good money, and likely to get a substantial increase in the next year. And, although I'm footing the bill right now, I'll inherit mom's assets when she passes.

-The divorce was exceedingly expensive on many fronts. A true "war of the roses." I'm a reasonable guy. This should have been settled at the outset, but instead we spent two years litigating it. Attorney fees alone were in excess of $400,000, and there was collateral damage to my career, etc. This is the single biggest threat to your wealth! No way to insure against it other than a prenup. Which we will have this time around.
Regarding paying for medical school, it wasn’t a “bit of an exaggeration” — it was misleading (although maybe not intentionally).

Offering someone free room and board is generous, but paying tuition and other expenses is a whole other level of financial commitment.

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Re: So, Wow [AA change after divorce]

Post by Outer Marker » Tue Sep 24, 2019 3:38 pm

LeftCoastIV wrote:
Tue Sep 24, 2019 3:29 pm
KlangFool wrote:
Tue Sep 24, 2019 3:26 pm
Outer Marker wrote:
Tue Sep 24, 2019 3:14 pm

- Not getting rid of the house. I do live in a high cost city, and real estate, including rentals, is very expensive. I'm paying $6,000 a month on a 15 year mortgage vs. $4,000 for what I was paying to rent a 2BR. My kids now have a real place to visit and their own rooms when they come over; my dog has a yard; and I own my own four walls which just feels good.
Outer Marker,

The correct comparison is you tied up 1.2 million or 400K to 500K equity in the house plus paying $6,000 per month. So, even assuming a conservative 6% return on that 500K, it is another 30K per year. You missed the opportunity cost of tying up your money into the house.

So, the actual number is 48K per year via 2BR rental versus 102K per year on the house. The difference is 52K per year. Enough money to put your kids and your mother into a 5 stars hotel when they visit.

Or, you could rent a bigger house and you still save money.

KlangFool
Presumably the house appreciates as well, as its own asset class (subject to market risk, like equities and other asset classes).

Yes, property values have gone nowhere but up. I'm not banking on that, but highly likely. I'm treating it as a "consumption" item, but its important to me, and I can afford it, even if it strains the budget at the moment. I was lucky enough to cash out my company stock to pay for the down payment on the exact day of its 10 year high. (Always better to be lucky than good.) I'm in a high enough bracket and pay enough taxes that I still get a tax benefit from itemizing even under the new rules. I also have a complete separate garden apartment rental that I need to get on the market which should pull in $1,500 to help offset the mortgage. I'm confident that buying the house was a good decision.

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Re: So, Wow [AA change after divorce]

Post by Outer Marker » Tue Sep 24, 2019 3:41 pm

delamer wrote:
Tue Sep 24, 2019 3:36 pm

Regarding paying for medical school, it wasn’t a “bit of an exaggeration” — it was misleading (although maybe not intentionally).

Offering someone free room and board is generous, but paying tuition and other expenses is a whole other level of financial commitment.
Agree. My bad. Not intended to be misleading.

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Re: So, Wow [AA change after divorce]

Post by EnjoyIt » Tue Sep 24, 2019 3:50 pm

Outer Marker wrote:
Tue Sep 24, 2019 3:14 pm
Thank you all for the thoughtful replies.

I'd intended this more as a question on asset allocation, and 70/30 seems "about right" given my goals and a 15 year time horizon. I could knock it down to 60/40, but I think 50-50 (my prior allocation) is too conservative.

I appreciate all the words of advice and caution about my personal situation and the generally sound boglehead theory to cut expenses and live as frugally as possible. But, I think that "deficit spending" is warranted in this situation to maintain the lifestyle I want and care for those who depend on me:

- Not getting rid of the house. I do live in a high cost city, and real estate, including rentals, is very expensive. I'm paying $6,000 a month on a 15 year mortgage vs. $4,000 for what I was paying to rent a 2BR. My kids now have a real place to visit and their own rooms when they come over; my dog has a yard; and I own my own four walls which just feels good.

- Assisted living for mom is worth every penny. Yeah, I could find something cheaper, but it would not be as nice. Feels like a resort and the food is excellent. For those advocating a medicade facility, you should see what those places are like. Really nasty. Depressing. This expense will not continue forever. Mom is in her 90's and collapsed yesterday and was taken to the ER. Thankfully doing fine now. She made many saccrifices for me, and did it on a teacher's salary. The best schools and other opportunities. She taught me how to "fish." Its why I have everything I do. My turn to take care of her now. Assisted living is the dirty little secret of the American health care system.

- My fiance is wonderful. I do not know what she sees in an old fart like me, but I am a very lucky man. Its been five years since the ex and I separated, so this is not exactly jumping in on a rebound. Dated plenty of others before I found her. We'd been living together for a year before we got engaged. She likes to pay her own way, works six days a week, etc. Never wants to go on vacation because its too expensive and takes her away from work. To say I'm paying for medical school is a bit of an exaggeration. She wants to take out her own student loans, but I'm not going to charge her for rent and groceries. I can support her in that way.

- I do have a "bail out" plan. My mom owns a house free and clear in New England that I'm renting out (which covers a bit of her care expenses). If I get sick or lose my job, I could retreat there. But, I'm earning good money, and likely to get a substantial increase in the next year. And, although I'm footing the bill right now, I'll inherit mom's assets when she passes.

-The divorce was exceedingly expensive on many fronts. A true "war of the roses." I'm a reasonable guy. This should have been settled at the outset, but instead we spent two years litigating it. Attorney fees alone were in excess of $400,000, and there was collateral damage to my career, etc. This is the single biggest threat to your wealth! No way to insure against it other than a prenup. Which we will have this time around.
Thank you for sharing more details.

I would do exactly as your doing. Pay for all living expenses and have the fiancé take out loans. Kudos to you and your situation

Continue paying for your mom as you have been.

I would consider refinancing my mortgage to a 30 year in the hopes of not being in the red every month. Eventually the $10k per month expense will disappear and you can always consider sending that cash towards your mortgage.

I would also not be adjusting my asset allocation unless your risk tolerance has really changed. Do you really need to take the additional risk?

BTW, how secure is your job? What would happen in the next recession? Can you lose the job and not be able to afford any of this because 70% of your equities dropped by 50%. Tread lightly with adding more risk to a lifestyle that you are having difficulty sustaining already.

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Re: So, Wow [AA change after divorce]

Post by Outer Marker » Tue Sep 24, 2019 4:19 pm

EnjoyIt wrote:
Tue Sep 24, 2019 3:50 pm
I would also not be adjusting my asset allocation unless your risk tolerance has really changed. Do you really need to take the additional risk?

BTW, how secure is your job? What would happen in the next recession? Can you lose the job and not be able to afford any of this because 70% of your equities dropped by 50%. Tread lightly with adding more risk to a lifestyle that you are having difficulty sustaining already.
That's the real nub of the question. Although my prior 50/50 allocation was very conservative for my age at the time, I did so because I had, in Bogle's words, "enough." I don't think that is the case anymore. I'd want to be able to draw at least $90,000 a year, which requires a $3M portfolio at a 3% safe rate of withdrawal. Which means I have a ways to go.

Per the Vanguard allocation models, going from 50-50 to 70/30 increases expected returns by almost a full percentage point from 8.2% to 9.1% - which is substantial - especially if we knock 2% off of those returns for inflation.

My risk tolerance is quite high. I bought like crazy in 2008, and at one point was 90/10 - but dialed it back after I reached my goal. I think its time to ratchet it back up. But, I'm a lot closer to potential retirement than I was at 40.

I consider my job to be very secure, but you never know . . .

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Re: So, Wow

Post by dogagility » Tue Sep 24, 2019 4:20 pm

lakpr wrote:
Tue Sep 24, 2019 8:38 am
For what it is worth: I am almost there (just a year shy of age 50), and my allocation is set to 70:30, and I plan to be at this target allocation for at least a decade more.
Yes. Asset allocation is personal; there is no reason to think you couldn't be 70:30 if that fits your situation.
I'm early 50s, expecting to retire in about five years, and am comfortable with my current 80:20 tilt. For some context, I was happy with my 100:0 AA up until a few years ago.
Taking "risk" since 1995.

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Re: So, Wow [AA change after divorce]

Post by dogagility » Tue Sep 24, 2019 4:22 pm

Outer Marker wrote:
Tue Sep 24, 2019 4:19 pm
EnjoyIt wrote:
Tue Sep 24, 2019 3:50 pm
I would also not be adjusting my asset allocation unless your risk tolerance has really changed. Do you really need to take the additional risk?

BTW, how secure is your job? What would happen in the next recession? Can you lose the job and not be able to afford any of this because 70% of your equities dropped by 50%. Tread lightly with adding more risk to a lifestyle that you are having difficulty sustaining already.
That's the real nub of the question. Although my prior 50/50 allocation was very conservative for my age at the time, I did so because I had, in Bogle's words, "enough." I don't think that is the case anymore. I'd want to be able to draw at least $90,000 a year, which requires a $3M portfolio at a 3% safe rate of withdrawal. Which means I have a ways to go.

Per the Vanguard allocation models, going from 50-50 to 70/30 increases expected returns by almost a full percentage point from 8.2% to 9.1% - which is substantial - especially if we knock 2% off of those returns for inflation.

My risk tolerance is quite high. I bought like crazy in 2008, and at one point was 90/10 - but dialed it back after I reached my goal. I think its time to ratchet it back up. But, I'm a lot closer to potential retirement than I was at 40.

I consider my job to be very secure, but you never know . . .
Sounds like increasing to 70:30 is fine in your situation and with your psychological tolerance.
Taking "risk" since 1995.

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